What Small Businesses Tell Us About the Economy That Wall Street Can't
What Small Businesses Tell Us About the Economy That Wall Street Can't |
| [03-March-2026] |
New GoDaddy Small Street data shows digital business growth accelerating in late 2025, signalling stronger job gains ahead TEMPE, Ariz., March 3, 2026 /PRNewswire/ -- New research from GoDaddy and UCLA Anderson Forecast finds that small business data offers earlier and stronger indication of upcoming U.S. economic performance than traditional measures such as the stock market. Last quarter's data captures digital business activity rising year-over-year. By bringing digital small businesses into the picture for the first time, the research shows how entrepreneurship can act as an early barometer of national economic health, complementing rather than replacing established measures. The findings come at a time when financial markets, jobs data, and on the ground, perceptions often tell different stories. What Small Street Is Showing Today In the fourth quarter of 2025, GoDaddy's Participation Index rose compared to Q4 2024, signalling renewed growth in digital small business activity nationally. Historically, increases in the index have preceded stronger payroll employment growth and declines in unemployment within three to four quarters. The latest reading points to economic conditions consistent with improving job growth in the months ahead. The report, "What Small Businesses Tell Us About the Economy That Wall Street Can't" introduces "Small Street" as a complementary economic lens built for this moment, giving small business data a seat alongside traditional market and macroeconomic indicators. While establishment-based data often arrives with a lag or reflects only national trends, Small Street adds a more real-time layer of insight by tracking entrepreneurial activity across millions of digital small and micro-businesses. Drawing on signals such as the number of digital entrepreneurs, new digital ventures, and GoDaddy's proprietary Participation Index, the lens captures shifts within a few months at a highly granular, local level. Key findings include:
Looking across decades of national data, the analysis reconfirms that stock market returns are statistically linked to economic outcomes, but the relationships are relatively modest. By comparison, small business indicators, specifically the creation of new businesses frequently with a physical location, show two to five times stronger relationships with real economic conditions. A 1% increase in small business births is associated with roughly 0.18% higher growth in GDP, 0.16% higher payroll employment growth, and a 0.15 percentage point decline in unemployment. The research also finds that changes in small business activity tend to appear earlier than traditional labor market data. Increases in new business formation are associated with higher payroll employment roughly three quarters later and lower unemployment about four quarters (a whole year) later, suggesting entrepreneurial activity captures shifts in local economic conditions before they are fully reflected in official statistics. GoDaddy's Small Street data highlights a particularly strong alignment with local business formation. At the zip code level, the number of GoDaddy entrepreneurs has a high correlation (0.84) with establishments employing fewer than five people. And a moderate correlation (0.53) with payroll employment stats. The findings suggest Small Street data identifies early business formation before it appears in many government datasets, and capture that it is a reliable proxy for the same trends as seen with traditional brick and mortar small businesses. "As traditional economic indicators are often delayed or limited in scope, this research shows why small business activity, particularly digital-first entrepreneurship, deserves greater attention in economic analysis," said Alexandra Rosen, economist and head of GoDaddy's Small Business Research Lab. "Wall Street remains an important indicator, but near real-time insight into online small business activity offers an additional lens for understanding what is happening in the broader economy, based on activity on Small Street and Main Street." William Yu, an economist at UCLA Anderson Forecast, said the research highlights the limits of relying on any single indicator to understand economic health. "Different indicators capture different parts of the economy. What this analysis shows is that early-stage small business activity captures dimensions of local economic change that equity markets alone cannot." Leading economists agree the analysis provides needed insight on where growth, innovation and job creation are headed. "This report is an important contribution to how we understand the real economy because it shines a spotlight on where Main Street employers and their employees live and work," said U.S. Chamber of Commerce Chief Economist Curtis Dubay. "By pairing decades of macroeconomic data with GoDaddy's real-time view of digital entrepreneurs, these data show what our local chamber of commerce partners see every day: small businesses are the most direct, timely signal of economic health in communities across America." The researchers emphasize that the findings do not imply causation and are not intended to predict future economic outcomes. Instead, the analysis shows that stock market performance by itself provides an incomplete picture of how economic conditions are experienced, particularly around jobs and opportunity. The introduction of Small Street alongside Wall Street and Main Street offers journalists, policymakers, and the public a reusable lens for understanding economic conditions today and spotting early shifts as they unfold across communities. The full report is available at research.godaddy/wallstreet About GoDaddy About GoDaddy Small Business Research Lab Source: GoDaddy Inc.
SOURCE GoDaddy | ||
Company Codes: NYSE:GDDY |
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